James Harries, a global equity income fund manager for STS Global Income & Growth Trust, reveals why investors should rethink heavy US market exposure, particularly given its high valuations. He discusses the benefits of diversifying into undervalued markets like the UK and shares insights on strategies for retirees seeking absolute returns. Harries also explores navigating volatility and how to position for market recovery, especially in light of the weakening US dollar and tariff uncertainties impacting global investments.
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insights INSIGHT
US Market Extremely Concentrated And Priced
The US market is unusually large and concentrated in low-yield mega-cap companies, raising valuation risk.
Troy underweights the US to fulfil a global income-and-growth mandate and avoid extreme concentration.
volunteer_activism ADVICE
Prioritise Income To Protect Retirement Capital
Build a portfolio that delivers income so retirees needn't sell capital during downturns.
Hold conservative, valuation-aware positions that protect capital rather than chase benchmark weights.
insights INSIGHT
Valuations Signal Lower Future US Returns
US equities look expensive on long-term measures and versus bonds, implying caution.
Other regions, notably the UK, appear cheaper and provide opportunities for income-focused investors.
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Most investors will have a sizeable weighting to the US stock market, particularly those who own global index funds or ETFs, which have weightings of around 70% to US companies. Some active global fund managers go against the crowd by holding less in the US, including James Harries of STS Global Income & Growth Trust. James explains why over a quarter of the portfolios invested in UK shares, and runs through changes made to the investment trust during the stock market sell-off in April triggered by US President Donald Trump’s tariff policies.
On The Money is an interactive investor (ii) podcast. For more investment news and ideas, visit www.ii.co.uk/stock-market-news.
Kyle Caldwell is Collectives Editor at interactive investor.
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